Tag: bat

BAT moves ahead with less risky tobacco and nicotine products, even as regulators remain ambivalent.

By George Gay

In its Sustainability Summary report published earlier this year, British American Tobacco (BAT) says that, despite the known risks, many people choose to continue to smoke. “But some want alternatives, and as a leading tobacco company we are well placed to provide them,” the report states. “We invest over £160 million [$268 million] each year in R&D, including extensive scientific tests and trials into new less risky products.”

This is all true. BAT has been researching less risky products for a long time—certainly since well before e-cigarettes were widely marketed—and has spent a huge amount of money on this quest. It has been as open about its research as it could have been expected to be, given that it is a commercial enterprise operating in a competitive market. It has engaged in discussions on harm reduction whenever and wherever it has been allowed to do so. And it is upfront about the quest for less risky products being about good business, as well as good health. “And, while tobacco remains at the core of our business, we see emerging opportunities in nicotine products—as an area for business growth, as well as benefiting public health through offering smokers less risky alternatives,” said CEO Nicandro Durante, in a Q&A included in the summary report.

I assume that what Durante is saying here is that the new nicotine products are going to be more profitable than are the products that BAT has traditionally sold; otherwise, he would seem to be suggesting that these new products might be initiation products, which would probably be unwise at the moment.

But then again, maybe he is suggesting that there will be some initiation with these products, and, if he is, I think he deserves a round of applause. We do at some stage have to be grown up about what adults get up to, because at the moment things seem to be heading the other way. In an interview published in New Scientist magazine, Sally Davies, the chief medical officer for England, was asked: What is the biggest health challenge that we face in the U.K.? And she replied that it was the normalization of unhealthy behaviors, in which she included eating to the point of obesity, drinking too much and vaping.

Do you notice the slippage here? In the days when all the artillery was pointed at tobacco, smoking and smokers were normal and had to be denormalized. Now, denormal is the default setting for certain government-identified adult behaviors and those who take part in them, and so to indulge in them with a reasonably clear conscience, consumers have apparently had to normalize them. This is fiction. Drinking too much, almost by definition alone, is not normal.

Having said that, I have some sympathy for Davies’ position. Clearly, it’s not good for a country’s productivity if a large part of what should be its workforce is too fat and/or too drunk to stagger out of bed in the morning. But the trouble is that there is a tendency for the government to set the bar too low, if you know what I mean. The government’s advice is that I should drink no more than 3–4 units of alcohol a day, which is the equivalent, I’m told, of a pint and a half of beer with an alcohol content of 4 percent. Now I have just gone to my cupboard and pulled out a bottle of fine Theakston’s Old Peculier, and I see from the label that it is 500 mL of 5.6 percent alcohol beer. Does anybody have a calculator? May I drink the whole bottle tonight, or must I keep some for tomorrow?

The bar for overeating also would seem to be set too low. I have a colleague who delights in referring to me as “scrawny,” but, in fact, if I test myself on the government’s body mass index scale, I’m on the cusp of being fat.

But the worst and most damaging bit of Davies’ reply was that to do with vaping e-cigarettes. Finally, we have a product, the use of which, as far as can be known at this stage, is hugely less harmful than traditional cigarettes, that works for many people as a substitute for smoking. And yet the aim of the U.K. government, apparently, is to denormalize the product, or, rather, in its world, to reverse the normalization process that has occurred.

Such a policy might make sense if it were the case that doing away with e-cigarettes would lead people into a fresh dawn of abstemiousness from where they would forsake all indulgent behaviors, but from where I’m sitting that isn’t going to happen. And yet it would seem that the U.K. government, which, in some ways, has taken a relatively enlightened view of e-cigarettes so far, seems to be joining the ranks of those who want to take decisions out of the hands of people who are proving perfectly rational in respect of whether they stay with traditional cigarettes or move on to e-cigarettes.

Rational choices

And this makes me wonder about the first sentence of the quote used at the start of this piece: Despite the known risks, many people choose to continue to smoke. How much longer, I wonder, will it be before somebody starts looking at how such choices ever became normal?

I suppose the obvious answer is “when the government finds a revenue source to replace that of traditional cigarettes, so it would be best not to hold your breath.” Nevertheless, there are already signs in some countries, including the U.K., that this particular choice is being looked at. At the end of March, leading U.K. doctors called for a ban on cigarette sales to people born after 2000. In part, this suggestion has merit because it would allow cigarettes to be faded away. And while it is difficult to see how the idea might work in practice, the suggestion is out there, and it has to be remembered that where tobacco is concerned, a lack of practicality or even rationality is no bar to an idea’s being accepted.

Indeed, on April 3, BAT, which is usually most restrained in its public pronouncements, was given to suggest that a conclusion drawn from a U.K. report on standardized packaging defied logic. BAT’s argument was that while the report, drawn up at the request of the government, had said there were limitations to the evidence currently available on standardized packaging, it had said also that such packaging could be an effective measure for public health in the U.K. I suppose the report could have added that such packaging might not be an effective measure.

On the same day, the smokers’ group Forest said that whereas it made sense for the government to take time and consult further, it seemed perverse to commit to a policy before those discussions had taken place. Forest’s comment came after the public health minister, Jane Ellison, had said that while the government was currently minded to proceed with standardized packaging, it would conduct a final short consultation.

Beyond shareholders

What this underlines, I think, is the need for BAT and other tobacco companies to move as quickly as possible to increase sales of innovative products. And BAT seems to be intent on doing just that. It is developing a new range of innovative, less risky tobacco and nicotine products, including e-cigarettes, heat-not-burn devices and reduced-toxicant cigarettes.

And its Sustainability Summary (http://doiop.com/batreport) kicks off with the words: “As our company is evolving and changing, so is our approach to sustainability. We have sharpened our business strategy, putting a much greater emphasis on sustainability. This Summary Report focuses on our three key areas of harm reduction, sustainable agriculture and corporate behavior.”

This is interesting because it makes you reflect on how much the industry is changing. In fact, the process of change has been going on for some time, at least from the point where tobacco companies started to accept publicly that tobacco use involved certain risks. But to start with, change was fitful because the industry was finding its way and, it has to be admitted, some old, less desirable practices were difficult to stamp out. And let’s face it, there is still some way to go. But I cannot help thinking that most of the changes are now heading generally in the right direction and would be difficult to reverse.

In fact, it now seems to be the case that it is many of the tobacco industry’s critics who find themselves floundering in the river of change. This seems apparent from the sometimes irrational reactions that occur in respect of products such as snus and e-cigarettes.

Of course, much of the BAT report will be dismissed by the industry’s critics as a bunch of fine words, and it is, but give it a fair hearing and I think you’ll find it is more than that. I was much taken with this quote included in the Q&A with Durante: “It’s about creating shared value and making sure that what we do as a business doesn’t just benefit our shareholders, but can also have a much wider, positive impact for society.”

Again, the reaction might be that BAT would say that, wouldn’t it? And I, as chief cynic, would sometimes agree. But there was no need for BAT to include such a sentence. And it didn’t just slip it in there as something that seemed like a good idea at the time. Multinational companies the size of BAT don’t talk about operating their businesses, so they don’t “just benefit our shareholders” without thinking that idea through.

As I said above, there is a sense that change is going in the right direction and is irreversible. BAT is clearly confident that its sustainability feedback loop—in operation for some time now—is fully working. And why shouldn’t it be confident? It almost stands to reason that if the sustainability settings for the likes of tobacco growers and consumers are correct, the benefits feed back automatically into the business machine and the output for shareholders is pretty much assured.

British American Tobacco (BAT) is benefitting from the gradual deflation in the illicit trade of cigarettes locally due to the improved regulatory environment in Malaysia, according to a story posted on The Star Online.

Managing director Datuk William Toh said the illegal buying and selling of cigarettes had declined last year by 1.6 percent compared to 2011.

“We saw a slight reduction in illicit trade to 34.5 percent of (overall) volume last year.

“Due to this, we are seeing a 0.24 percent growth in legal volume, which is the first time in many years where we have enjoyed volume growth,” Toh said at a briefing after the company’s AGM.

“This is good news and we hope the Government will continue to put in more effort into this area. Illicit trade at 34.5 percent is high by any standards.

“It is a difficult challenge as we have long coastlines with neighbouring countries where smugglers can easily enter,” he added.

BAT attributed the reduction in illicit trade to the sustained excise duties for two consecutive years and the increased role by the various enforcement agencies such as the Customs and border patrol in nabbing smugglers.